Offshore Outsourcing Vs In-House Development - What's Best For You?

You may have already heard a lot of advocacy to outsource development work overseas.

While some other folks who have had an awful previous experience will never suggest you go with outsourcing or at least for the core development.

So, should you outsource development overseas or look out development agencies or developers locally?

Let’s find this burning question out!

If, you are a full fledged business enterprise looking to expand your technology.

If, you are an early stage startup with MVP in hand.

Or, if you just have an idea that you want to make live.

Whichever the stage you are at, you will inevitably have to make the choice of hiring between local or offshore development.

By the way, most of the new entrepreneurs don’t ever bother to think about this in the first place.

They saw $150/hr listed in front of their local developers and $15/hr on some overseas developers.

And BAM! Guess what?

They found their first development partner for their dream project for 10x cheaper than the local devs.

When we all know this world is driven by money, then why we are discussing further on this?

But wait!

"Well, all that glitters isn't gold, I know you've heard that story told."

The Benefits of Outsourcing Overseas Development

Cost: Obviously, the cost of labor in outsourced work is much lesser than that of in-house or local developers. In fact, you can get overseas developers for about quarter of the cost.

And since the entrepreneurs are quick in doing maths when it comes to saving some money.

This labor arbitrage is enough to convince any new entrepreneur to choose offshore outsourcing over local development.

But let me pass on some findings from this survey done by ComputerWeekly; “62% of offshore contracts cost much more than what businesses expected.”

No full-time hassle: This is the other aspect of outsourcing that lures the entrepreneurs. You don’t have to hire full-time workforce to meet your needs. So, no offline recruitment hassle.

But on the flip side, it is much challenging to recruit and vet a good developer online than offline. Because now you see every next developer online has those shiny 5-star ratings which you can never authenticate the credibility.

A lot of options to choose from: It’s a no secret that the internet is full of talent. You just need the right eye to dig out the real gold. With the advancement of platforms like Upwork and Freelancer, hiring the desired developers isn’t a pain anymore. But as we know, “On the internet, nothing comes with a guarantee.” It is you who needs to vet out the best developers for your specific product. You can hire your first developer in 10 minutes online but hiring the right one… [Can’t comment].

No Office Needed: There is another liberty of outsourcing the work, ‘No Workplace Required’. You could save an ample amount of money by not having a dedicated office space. Well, you can outsource the workforce while chilling out on a six-month vacation in Bali.

More time availability: Apart from money, you could save a lot of your time that you would spend on offline recruitment, team meetings, and a whole lot of other headaches.

No team management: Managing a team isn’t everyone’s cup of tea, especially the novice entrepreneurs found it cumbersome managing an in-house team of developers.

When Should You Avoid Overseas Outsourcing

Quality: Apart from money (that you could save) with overseas outsourcing, there are a lot of other factors that need to be considered. And ‘Quality’ top that list. You can’t predict the quality of their code or work. Maybe they got a lot of appreciation for their previous works, but you can’t authenticate the authenticity. And one more thing, maybe they got 5-star reviews for a simple tic-tac-toe game app that they developed but not necessarily for your much complex business app.

Collaboration: Collaboration is one of the strongest pillars of any project. And this where you might face issues with your overseas hiree. Issues due to completely reverse time zones, language barriers, cultural gaps. Delays and quality issues are common and expected but most of the startup entrepreneurs aren’t aware of these situations.

Communication: As I’ve already emphasized on this thing before, ‘Communication’ should be like crystal clear between the teams. Think of it like this - you as a team are building a house from scratch and so you can’t afford to miss a single brick at the very starting of your foundation.

Security: You can’t build your startup from a cave, you might need to open up certain things (things that you think are confidential like core business idea, trade secrets) to your developers beforehand. Well, you signed an NDA with the developer to keep things in your control but what if they breach the contract and leaked your core idea or strategy of execution. Will you fly overseas to impose the required laws and actions that aren’t even controlled by your government? Working with local agencies often involves signing a contract which covers both the client and the agency, and often covered under local country laws. This isn’t the case if you decide to work with an overseas company.

Obviously, there are a lot of other factors that decide whether you should go the overseas route or not. But in the end, it is you who need to decide whether the attractive cost arbitrage outweighs the concerns.

So What’s The Best Solution?

Congrats! There is a middle way, where you can have the best of both the worlds. Outsource the core development with local agencies.

By hiring a local team of developers-

You are in full control of any quality issues that you can rectify much quicker.

You and your outsourced team speak the same language so no communication barrier. Afterall you can’t build your startup with a dictionary in hand.

No cultural gaps

And most important, you can enforce the law using your NDA if anything goes wrong with your local development.

And since it’s outsourcing, you don’t need to hire a full-time team, no office required, no team management (though it’s always needed), personal meetings, scheduled team, and progress monitoring.